Contents

Abstract

Query

What approaches can be used to (i) Leverage the positive social function that shadow economies provide to conflict-affected populations and (ii) Incentivise war profiteers to join the legal economy in post conflict environments?

Key findings

Approaches which can be used to leverage the positive social function
that shadow economies provide to conflict-affected populations include:

Understanding the relationship between different aspects of the
economy through stakeholder assessments can reduce the risk that
interventions have detrimental impacts on people’s coping strategies
(Ballentine and Nitzsche, 2005).

Strengthening state capacity to provide basic services, security, and
employment to its citizens so they do not have to rely on predatory
elements of the shadow economy (Ballentine and Nitzschke, 2005).

Providing alternative livelihood opportunities (Looney, 2006).

Approaches which have been detrimental to leveraging the positive social
function that shadow economies provide to conflict-affected populations
include:

Interventions which have not considered the context often result in
negative consequences for conflict-affected populations (Pugh and
Cooper, 2004).

Approaches which can be used to incentivise war profiteers to join the
legal economy in post conflict environments include:

Raising the cost of involvement in the shadow economy through
sanctions and control regimes, strengthening regulations and improving
resource governance.

Creating the right conditions for investment through strengthening the
state’s capacity to provide a secure and predictable environment
(Goodhand, 2004).

Providing positive inducements and support to encourage profiteers to
invest in legitimate business (Goodhand, 2004).